Welcome to Molecular Ideas, and thanks for sharing your time with us today! Today, we break down the startup success criteria of 'Founder Fit' into three distinct phenomenon that influence your technology's progression, team dynamics, and ability to form effective investor partnerships.
"I'm sorry, but this just isn't a great fit for me right now."
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How many times have we all heard some variation of that line? Whether it is during job applications, relationship conflicts, or raising capital for a startup, the implication is the same - it's over.
Despite the intellectual prowess and passion found in many life science startup founders, it can be challenging to form a team, raise funds, and advance innovative technologies. Why? The myriad of challenges, justifications, and excuses often boil down to something called 'fit', or sometimes 'founder fit'.
For the moment, let's define 'fit' as the compatibility between two or more stakeholders who are working towards synonymous goals. Notice that the goals do not have to (and often are not) the same. Rather, they are in parallel or working towards a single axis from different perspectives.
While there's no given formula to finding a fit between these individuals or teams, there are three archetypes that commonly arise under the umbrella term of 'founder fit'. More often than not, by the time you've heard the term from someone in a live conversation, you've lost. Fortunately, understanding these three archetypes and how to manage your unique founder and/or startup executive persona with different stakeholders can make you a more effective leader and compelling investment.
These three archetypes are Fit-to-Technology, Fit-to-Team, and Fit-to-Investor.
Finding Fit-to-Technology
How well-suited are you and your team to defining, developing, and commercializing this technology?
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Understanding a founder's or executive's fit to their startup's technology may seem simple. Just count the number of advanced degrees, relevant papers, and professional experience the team has to offer and check the box, right?
Not so fast. While these resume' elements do function as mechanisms to de-risk technological advancement, they fail to account for several intangible factors that often make or break startups - especially in the life sciences.
Advanced degrees and published papers can be seen by external stakeholders as past-facing metrics. While there are no facts about the future, customers, strategic partners, and investors are concerned with that your offerings will do for them. As such, it's critical to communicate clearly and reflect a process by which you will advance your technology.
The way in which startup executives speak about the technology benefits is the first criteria of establishing fit-t0-technology. The core offerings of life science startups often require a high degree of specialized background knowledge to independently grasp the nuances behind what makes it effective at meeting an unmet need. Many founders focus on pitching the features of these assets to investors and customers, rather than their benefits. In doing so, they sacrifice relevance for credibility, when both are needed to succeed.
How do we balance on this razor's edge between generality and nuance? Advising numerous startups from ideation to Series A stages has shown me that it is often better to be direct and simple early on with your value proposition and technology overview. Once the common stage has been set, you can introduce nuance like variations of an orchestral melody.
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Simply put, if the audience doesn't know what you're talking about or is trying to guess your premise early on, they're not going to find value in your experience. Your audience needs to be brought along with you in a presentation - even if it's basic or if you've said it a thousand times before. Communication is also essential in informing our second 'founder fit' archetype.
Finding Fit-to-Team
How well-suited are you to building, cultivating, and communicating within your team?
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The second type of 'fit' that strategic partners and investors examine reflects your contributions to the team and team dynamic. It's no secret that life science startups bring a plethora of talented, passionate, and experienced individuals together. It's no surprise that the technology they'll attempt to develop can create significant financial value and improve quality-of-life.
However, the most sizable barriers to advancing outwards are not the defining the technology or access to funding - it's the team's dynamic and (intellectual) diversity.
Team dynamic refers to the communication patterns of a team - who works well with whom, and how comfortable are individual team members with sharing or owning different types of work?
Team diversity extends beyond a range of different social, ethnic, and gender identity backgrounds. Rather, it refers to the sum of these influences and professional experience that informs an individual's unique paradigm for solving problems and working with others.
These factors may seem intangible or hard to quantify, especially in an external-facing scenario. After all, you're constantly working together over hundreds of hours in many different contexts. However, to a trained eye, they are not.
Entrepreneurs and investors alike recognize patterns in how teammates refer to their own work and the work of their team. Sometimes called the 'first-person fallacy', teammates that often use 'I' over 'We' can leave a bad taste in the mouths of the audience. This is because they are trying to emotionally and monetarily invest in the idea of a business, which has its own goals and impacts that (should) transcend any individual's needs. An individual's needs not only often fail to further this vision, but they contradict the very premise of a startup in the first place.
"Never doubt that a small group of thoughtful, committed citizens can change the world: indeed, it’s the only thing that ever has."
-Commonly attributed to Margaret Mead
This isn't to say that individual contributions, specializations, and passions should not be recognized. Quite the contrary - startup executives should empower their colleagues to own their work in their own way. As long as it is in service to the common goal(s), each individual advances the company's progression. The diversity of a startup enables different perspectives to be brought to the table, so that leaders can then make informed decisions.
There is no doubt that entrepreneurship is a high-pressure environment fraught with uncertainty and personal complexity. Inevitably, every teammate is taking a risk by commuting to the project, whether it is financial, reputational, or personal. Combine that with the fact that bad days happen, and the task of forming a positive team dynamic may seem especially daunting. The alternative is not just chaos, but also an emphasized undercurrent of uncertainty around who team members can trust to stick with them and treat them with respect. Teams may fold quickly once this current takes hold, or it may take years - but once it takes hold of a team dynamic, it's nearly impossible to stop.
The bottom line is that team dynamics are difficult to craft, but they are not build in a day. They are formed through a combination of marathon efforts (little influences, feedback, and communication practices) over time and one-time decisions (hiring/firing, emotional responses, and reconciliation). They are the ball in the pit that is easy to lose track of but ultimately determines your success - both internally and externally. Remaining vigilant and seeking outside guidance through mentors and coaches can help you build what you want to create.
Finding Fit-to-Investor
How well-suited are you to a given investor's strategy, experience, and goals (and vice-versa)?
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These first two archetypes of founder fit feed into a company's potential fit-to-investor. However, investors have additional unique considerations as external stakeholders with goals that parallel growing your business.
Regardless of their backing, experience, or relationship with a startup executive, an investor's goal is to achieve a return that compensates them for their principle, time, and risk. With this in mind, the need for clarity around your funding 'ask' cannot be overemphasized.
There different prevailing views on what you should share with investors during first meetings, subsequent meetings, and once you've established a partnership. However, the most productive conversations and best partnerships are formed on the bedrock of communications. This means that you don't just need to understand your own business needs (with an extra margin of error), but also an investor's given strategy, desired outcomes, and underlying interests for speaking with you.
The complexity of these discussions makes finding investors a bit of a matchmaking game. These are not short engagements - your investors will be with you during your bitter ends and/or sweetest victories. The question then becomes "what do you want them to be asking - for their money back or how they can help you move forward?"
To set yourself up for success, research an investor's past body of work. Look on their website and identify if there are comparable companies in their portfolio. Research how they've been viewed in the market over time. Feel free to call them and ask 'politely' about the pros and cons of their partnership.
Investors can offer more than capital. They can offer you strategic advice, connections to mentors, advisors, and board members, and/or an inside path to strategic partnerships with competitors or well-funded R&D houses. Doing your research, setting up an integrative team dynamic, and practicing your clarity in communications early on will enable you to glean information from investors during discussions.
That said, not all that glitters is gold. Forcing a fit - even when desperate for capital - has many hidden costs attached to it down the line. These can take the form of losing company control, reputational damage, and/or losing opportunities for strategic partnerships that would advance your technology.
Fitting In as a First-Time Founder (or Team Member)
If establishing these types of founder fit are challenging for experienced entrepreneurs, they can seem Herculean for first-timers. Lacking the sought-after combination of experience and communication is often why entrepreneurs earlier on in their career can have more significant barriers to funding.
Pursuing an advanced degree in your chosen field, practicing effective communication skills through improv and public speaking, and/or working as a 'free' consultant' to gain experience can be effective ways to combat this.
Further, never underestimate emphasizing the value of what's in it for your stakeholders and leading by example. This takes practice - but don't worry; none of us are perfect. What matters is that we remain respectful and vigilant.
'Form Fits Function'
There is no doubt that building a startup is exceptionally difficult, and no team is without a bit of dysfunction. Understanding the process by which decisions will be made and practicing clear, respectful communication helps limit risks with your team, investors and partners. Empowering each team member as a subject matter expert enables leaders to leverage diverse perspectives and make informed decisions when faced with many difficult choices. These actions cascade into internal and external relationships that define the success of your business.
Everyone has an opportunity to be an effective partner for your startup if there is a mutual fit. Finding it is a matter of clear communications and fundamental respect. In any other form, there is only dysfunction.
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